January 10, 2011

As you may have noticed, the NYT put up a long article about whether it's worth it to go to law school — whether it's a good investment. The article begins with an anecdote about a young man with $250,000 in student loans and compares his situation to that of a person who bought an expensive house and has a big mortgage loan to pay off. Of course, education is different from a house. You can sell the house, but you keep your education in your head.

Both the house and the education may turn out to be worth less than you paid, but the present-day value of a house has to do with what someone else is willing to pay to take it off your hands. You don't sell your education to someone else. You try to get a job. When you buy a house, you have some expectations about how the market price will change over time. When you get an education you have expectations about what kinds of jobs you may be able to get with it. But so much depends on you. You have to have absorb and process the material the school teaches, you need to present yourself appropriately in interviews, and, once you get the job, you have to perform well. Your services are the product. The education was part of making your services worth buying in the job market. But no one ever purchases your education from you.

Now, why focus on law schools? People buy all sorts of education. It's expensive. And students major in plenty of subjects that are far less likely to result in jobs. Here's where we get to the real meat of the article: Do the law schools trick students into thinking they are buying a bigger boost in the job market than they're really going to get? And it's the old U.S. News and World Report problem. As schools vie for higher ranking, they do what they can to produce statistics that factor into the calculation, and one thing is the percentage of "graduates known to be employed nine months after graduation." Law schools today report an average of 93%, which is 9% more than back in 1997, even though everyone knows the job market for law grads has gotten much worse.

Another statistic that counts in the rankings is median starting salary:

Many schools, even those that have failed to break into the U.S. News top 40, state that the median starting salary of graduates in the private sector is $160,000. That seems highly unlikely, given that Harvard and Yale, at the top of the pile, list the exact same figure....

That is to say, the U.S. News rankings are, on their face, unbelievable.

So the glut of diplomas, the dearth of jobs and those candy-coated employment statistics have now yielded a crop of furious young lawyers who say they mortgaged their future under false pretenses. You can sample their rage, and their admonitions, on what are known as law school scam blogs, with names like Shilling Me Softly, Subprime JD and Rose Colored Glasses.

“Avoid this overpriced sewer pit as if your life depended on it,” writes the anonymous author of the blog Third Tier Reality — a reference to the second-to-bottom tier of the U.S. News rankings — in a typically scatological review. “Unless, of course, you think that you will be better off with $110k-$190k in NON-DISCHARGEABLE debt for a degree that qualifies you to wait tables at the Battery Park Bar and Lounge.”

But so far, the warnings have been unheeded. Job openings for lawyers have plunged, but law schools are not dialing back enrollment.... Apparently, there is no shortage of 22-year-olds who think that law school is the perfect place to wait out a lousy economy and the gasoline that fuels this system — federally backed student loans — is still widely available.

It's important for prospective students to know what they're getting into. But are they being tricked into thinking it will be easy to become a lawyer, make a lot of money, and love your job too? I don't think so. The bad economy has made the odds worse, but students aren't fools. The NYT focuses on one particular individual, who seems to have been especially unrealistic. (You can go to the article to see the details on this one guy. I don't know why he was chosen as the star of the article.) I think most students do think hard about taking on loans and training for the legal profession. You've got to search for the truth and think hard about where your decisions will lead you and if you want to go there.

Quite aside from the economic issues, many people go to law school only to figure out they don't like being a lawyer. But you have to do something in life. What will it be? What else are you going to do? For far too many young people, law school seems like a specific, sensible choice. Three years of education, and you will be highly qualified for a wide array of respectable jobs. If you're reasonably smart and hard working, you will get through it. But it's not a magic ticket to affluence and prestige.

31 comments:

Given the cost of the education and the pessimistic (apparently) outlook for decent money after said educations expenses, I'm fairly certain I'll advise my children again a law career. It may sound like swinging for a single instead of the fences, but there are SOOOO many extremely well-paying jobs that don't require anywhere near the schooling and cost to get into or maintain. Sheet metal machinist, for instance...we're facing a crucial shortage of them in this country and they are going to start commanding salaries most law grads would kill for.

In all honesty, I will encourage my children to play to their strengths. If one of them turns out to be both a tenacious debater and a persnickety researcher, along with a genuine interest in civics, I may grudgingly encourage law.

PS - do we have a HTML code for strike-through in this format? I sacrificed a decent bit of snark for want of knowing what it is. "strike /strike" and "s /s" doesn't work.

I entered the job market 50 years ago in the midst of the last serious recession, a recession made worse by the OPEC oil embargo.

So, you can't make your decision based entirely on immediate economic reality.

If my kid were thinking of going to law school, I'd suggest that he/she find a way to minimize the loan burden.

I met literally thousands of young associates back in the day when I worked for corporate law firms. So many of them were astounded to discover that a job at a corporate law firm is just another clerical paper pushing job. It's boring as hell for most people, especially when you're young.

Be advised. With a few exceptions, such as hell-bent high level litigators, the legal biz is a crushing bore.

"'Law school might not be worth it for another 10 or 15 years,' he says, 'but the riskier approach always has the bigger payoff.'"

Also, it has that other thing...you know...what's it called? Oh yeah, risk.

I thought about going for my JD straight out of undergrad at Chicago. Then I looked at my student loan balance already in the 6 figures and decided maybe working in a law firm for a bit first might be a good idea. Now, there's no way in hell I would pay another $150,000 to live the life of a junior associate.

If career security is the jobsearch goal, then go to an Oil Company and work as a summer intern there. Than finish a degree in Geology and Petroleum and Geological Engineering with a promised job on graduation. Lawyers are for the middle class to upper middle class property owners that need to use lawyers for protection of their property from con men. Therefore the population that they serve is quickly disappearing. It is being re-distributed.

Do the law schools trick students into thinking they are buying a bigger boost in the job market than they're really going to get? . . . are they being tricked into thinking it will be easy to become a lawyer, make a lot of money, and love your job too?

Absolutely. Do not be so naive into believing that law school hucksters are so pure and virtuous -- they are selling a product, emphasis on SELLING; those law school professors cost a hell of a lot of money.

Now it would be no big deal if all these schools were merely charging a couple thousand dollars per year in tuition, but we are talking mega-bucks here, we are talking hundreds of thousands per student, from tuition to housing to books to fees. Maybe it wasn't in the past, but all of academia has become an overpriced scam, much like the financial markets, housing, and the healthcare industries have exploded in greed.

If they had any true integrity, schools would abolish the current system of educational law, whereby the student is entirely at the mercy of the greed and power of the school, and they would instead follow the contract, quid-pro-quo model, whereby students could sue for breach of contract, the quality of classes would actually have to bear some relationship to the price charged, both schools and professors would be subject to antitrust laws, and lifetime tenure for overpriced hack professors would be forever abolished.

Law school is an easy case to examine because it's basically a trade school - a very specific education leading to a very specific type of job. So it's easier to treat it as a pure investment and make the calculation as to whether it paid off. An overly simplistic calculation, but one that every law student should make. If they aren't capable of making it, is it likely that they could become good lawyers?

Law School students are the perfect patsies. They are young achievers who are used to betting on themselves and aren't yet well equipped to consider that in law school they will be surrounded by other young achievers used to betting on themselves.

Sure, the few winners are young achievers just like them, but the sea of losers are too. It's a different game and by the time they realize it, the law school has their money--by all accounts far more money than it costs to educate them.

If the legal profession is so overpopulated then why hasn't that been reflected in the cost of hiring an attorney? The Laffey Matrix shows a steady upward trend in legal fees. A free market, not a market controlled by a union/guild/bar association might offer some relief to the poor, suffering young attorneys. But that's not going to happen, is it.It seems obvious to me who benefits from discouraging people from entering the legal profession. Lawyers.

If there are law schools lower than maybe the top 5 LS's advertising the $160k figure, I hope that some enterprising grads sue the heck out of them. I would suggest that the only fresh-outs getting that much are getting it from the top tier NYC, LA, etc. firms. And that means either a very top LS, or the very top of your class otherwise.

There are a couple of factors that you need to keep in mind with those top salaries. First, as noted above, they are primarily offered by firms in cities with very high living costs. Secondly, the firms that offer them tend to have very high leverage - that means that they have a lot of associates per partner. Which means that a lot of associates are pushed out before making partner (etc.) For those who survive, the brutal work load can be worth it, at least financially, with partners in some of the very top firms averaging up to maybe a million a year.

But that is the very pinnacle of the business. We are talking a percent or so of those graduating from law school ever making partner in such high billing/high paying law firms. The rest of us hopefully find a place down below that where we can be reasonably happy. In my case, that means working for a decent sized regional law firm in an office that is within sight of a nice sized ski area.

I hear undergrads talking about how they are not taking out loans, so I'm sure the new austerity has reached law students as well. The bubble is bursting, as insty says, and it's already started in Europe, where higher ed is totally funded by the state (taxpayers) and is going broke.

If the legal profession is so overpopulated then why hasn't that been reflected in the cost of hiring an attorney? The Laffey Matrix shows a steady upward trend in legal fees.

I am surprised that it hasn't. My firm has done decently well over the last couple of years, all things considered, by aggressively marketing into areas with much higher living costs, which means competing with firms that have higher billing rates. It works because the new clients are an easy hour away by air, and much of the work can be done over the phone. But the stories we have been hearing about the firms from which we have been acquiring business from have been brutal over the last couple of years.

The reality seems to be right now that a lot of companies are cutting back on their outside legal work, and are looking for providers who can supply equivalent work for less cost.

I will admit that billing rates do seem to be fairly sticky in a downwards direction. But that doesn't mean that the law firms are receiving as much money for an equivalent amount of work from many of their clients. Rather, firms seem more willing to provide discounts and other billing arrangements, such as flat fees, are being offered.

The same negative things could be written about the economic downside to going to medical school--4 years exorbitant tuition followed by 3-5 years working 100 hours a week for minimum wage as an intern, resident, fellow BEFORE you begin to make enough money to be able to begin paying back your student loans.

As someone who did go to med school, I actually think that my sons,ages 26 and 28, who went to law school are much better situated financially than a med school graduate of the same age.

If you're in the military and you're eligible for the post 9/11 GI Bill (which is AWESOME), you don't need to worry about getting a job because you won't have any debt to speak of. I wish it were in existence just a few years earlier.

I never had any intention of finding a job after law school. My intent was and remains to have my own office. I may never be rich, but I won't be living in corporate serfdom.

I hear undergrads talking about how they are not taking out loans, so I'm sure the new austerity has reached law students as well. The bubble is bursting, as insty says, and it's already started in Europe, where higher ed is totally funded by the state (taxpayers) and is going broke.

I don't think that the bubble has burst yet for law schools, but I, too, expect that to happen soon.

I think that if I were advising a prospective law student, I would suggest that they take out big loans only if they get into the very top schools - maybe the top 5 or so. Otherwise, attend a good state school, like Ann's, and preferably where they can get in-state tuition. I think that a Harvard or Yale law degree still pays for itself, and will continue to do so. But most of us don't go to those schools.

ALL higher education is oversold, even engineering. One problem is that the degrees which do require some sort of advanced degree because of what you actually learn are weighed down with nonsense classes which serve to support the nonsense departments at universities.

Were colleges and universities actually sensitive to the marketplace, students wouldn't have PE requirements nor would they be required to take dozens of classes they already took in high school. There would be no XXX studies and entire colleges with two or three students studying the core curriculum of those colleges.

Add to all this a federal government which is ferociously distorting costs with all the grant and loan programs. It has been obvious for decades that universities set their tuition according to the amount of money available from grants and loans.

Finally, the notion that we all must be college educated is destroying the trades (not just directly, but the constant criticism that only white collar jobs are worthwhile is disgusting. US tax and trade policy is also hell bent on destroying high skilled factory jobs.)

As someone who did go to med school, I actually think that my sons,ages 26 and 28, who went to law school are much better situated financially than a med school graduate of the same age.

Interesting comparison there. The AMA does a much better job at controlling the supply of U.S. medical schools, and the number of students enrolled in such (after all, their graduates aren't being trained to sue for antitrust violations). But, it also appears much easier to get licensed in the U.S. as a physician than as an attorney, when coming into the U.S. Indeed, I know a number of doctors who went off-shore for medical school, and have done well here practicing medicine (one friend was in Granada in MS when the U.S. invaded there to protect the med students from the Cubans).

The problem though these days with medical school is that the government has screwed up the market so badly. Medicare, Medicaid, etc. have been cramming down reimbursements for years now, and it seems to be getting worse with ObamaCare. This seems to hit the front line docs the hardest, with some specialists still able to earn obscene incomes. And throw in all the paper work that is now required for reimbursement, and it doesn't look promising.

Add to all this a federal government which is ferociously distorting costs with all the grant and loan programs. It has been obvious for decades that universities set their tuition according to the amount of money available from grants and loans.

Indeed, the higher education bubble seems highly correlated to the amount of government loans available.

ALL higher education is oversold, even engineering. One problem is that the degrees which do require some sort of advanced degree because of what you actually learn are weighed down with nonsense classes which serve to support the nonsense departments at universities.

I would agree somewhat, but disagree overall, esp. when it comes to engineering. The degree that doesn't seem to pay for itself there is the PhD. But, I would suggest that a Master's degree does make sense there.

When I was working for an electronics company, the entry level jobs were graduated by degree level. And the work that each level did was also, somewhat, graduated. The most interesting work was done by PhDs, or those with Master's degrees who had shown they could do it. Those with Bachelor's degrees were doing the grunt work.

But while entry pay for a PhD was higher than for someone with a Master's degree, in many cases, the raises that they would get while their counterparts were still in grad school working on their doctorates would more than compensate for the difference in entry level salaries. Plus, they were earning money the entire time, instead of running up student loan debt.

Even though there's certainly some risk in the investment in law school, it still might be a good risk for some.

The lawyers that I've personally met have all been thoroughly unimpressive mediocre minds that could never have made it in engineering or management. What other profession could these people have chosen, where they could have made so much money with their mouths?

Prostitute, I suppose.

So what's someone to do, if their SAT math score is somewhere in the 400s, and yet they want to make $150K per year without getting their hands dirty?

ScottM, do you seriously think that many of these people who go into law would be good at sheet metal fabrication? It requires spatial reasoning, intuitive knowledge of physics, and the willingness to do actual work.

Ha. Where is the fervor for consumer protection? Or at least adequate (and truthful) disclosure so that an informed consumer might have a chance to "know what [he's] doing" before it's too late? It seems like a lot of the marketing material for law schools is intentionally false. In other contexts that would be condemned as a form of consumer fraud. Why shouldn't it be seen as a problem in this context?

Ann asks: "Now, why focus on law schools?" Maybe because lawyers usually write the rules that govern everyone else. And lawprofs sometime like to churn out articles urging even more such rules.

PLC is not a programing language. It is a device used to control industrial production equipment. The device—sometimes an ordinary PC programed to emulate a PLC—is programed using a logic diagram called a 'ladder diagram'. It tells which part of a machine to activate when. Programing them is taught in Industrial Maintenance courses in two-year tech schools.

But so much depends on you. You have to have absorb and process the material the school teaches, you need to present yourself appropriately in interviews, and, once you get the job, you have to perform well. Your services are the product. The education was part of making your services worth buying in the job market. But no one ever purchases your education from you.

Ken wrote, The device—sometimes an ordinary PC programed to emulate a PLC—is programed using a logic diagram called a 'ladder diagram'.

You don't always use ladder logic. Some languages are graphic languages. The key is that a PLC is a computer with the capability to work with a large number of inputs and outputs of various kinds, unlike a personal computer that usually only has a printer, mouse, etc. On a PLC you will often have proximity sensors, pressure sensors, raster scanners, pneumatic or electric actuators, etc. The list is as long as your imagination.

The first popular PLC's were made by Texas Instruments back in the early seventies. Some are still in operation today, I imagine, as I was working with some in my factories in the mid nineties. They worked and it wasn't worth anyone's time or effort to update them. But they were a pain to program as you could only see one step of the ladder logic at a time. When I worked at Apple, one of my techs could write quite a large program in his head using that method. He is abnormally bright, and a great guy.

I like PLC's, they're much more sensible than law, but the truth is that it's not much of a career if you have to be dependent on manufacturing in this economy.

John humbly said, I've taken multi-day workshops in PLC programming and know enough to know that I don't know enough to program them.

Eh, most of programming is from doing, not studying. To really know how to do it, you have to do it. That is, dig in and try things, debug what people before you have done, learn their exception handling methods.

Just like in law school, the rules are easy. It's the exceptions to the rules that are the issue. Your logic has to include what will happen when things don't work as you expect them to work.